Trading Forex Online: Is it a Good Idea Using a Demo Account?

Trading CFD in Forex, stocks, indices, ETFS and commodities can be beneficial and generate a larger profit but is also a market that generates losses.

As the market is a market with risk and the possibility losing money a demo account might be a good idea. But what are the advantages and disadvantages using a demo account?

A demo account is a part of the real trading account; it has the same instruments as a real account and the currency rates are the live currency rates. The advantages using a demo account is that there are no risks as the money are virtual money and the cost using the account is zero. The disadvantage is that the profit generated is also virtual money.

Another advantage is the possibility to try different trading strategies and learn how the platform works in connection to the plan; an example of a trading plan is the use of indicators such as the use of the Bollinger bands and the stochastic indicators; another example is the use of moving average and the MACD indicator.

One of the disadvantages is the risk; on the practice account is the risk zero and the money is virtual money and the money amount is large; in a real trading situation is the money real and the money amount limited; it is not possible to trade unlimited trades on the real account as it is on the practice account.

On the internet is a lot of articles about advantages and disadvantages using a demo account and they argue that it is a disadvantage using the practice account as the feeling using virtual money is not the same as using real money; this is true also in connection to the money limitation on the real account; but with the demo account is it possible to trade with lager amount and get the feeling of how it is to trade with larger amounts; the feeling of losing 1 dollar is not same as the feeling of losing 10 dollar on each pips.

Some trading platforms have a bonus or a gift card for signing up at their trading platform; if you have the interest trying different trading platforms with real money is the social trading platform eToro a possibility as they at the moment is giving away a free 20 dollar coupon; another trading platform is PLUS500 they give away a bonus for signing up; at the moment is the bonus 25 Euro.

Please notice that your capital may be at risk trading CFD.